Towards a truly integrated newsroom

Digital technology is turning many of the business models of past generations on their heads.

While some nimble companies have been quick to grasp the opportunities of the digital age, others are transforming themselves in order to keep up.

Despite a few hiccups in the days after its May 18 trading debut,
Mark Zuckerberg
’s Facebook and its 901 million online users highlight the dramatic changes taking place in the way we communicate and do business with each other.

This newspaper already has a comprehensive website and our reporters and editors tweet and blog with the best of them, as well as providing readers with regular email alerts, the latest markets data and live-streaming video content.

Late last year we revolutionised our business model by slashing the cost of an online subscription, resulting in a doubling of subscriber numbers.

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Admittedly, we haven’t always been first movers when it comes to adapting to new technologies.

But The Australian Financial Review this past week took another important step in its transformation into the world’s only truly integrated newsroom with the launch of a stylish and reader-friendly iPad app.

Our app isn’t just a news content aggregator (there are plenty of them around) and it isn’t merely an online replica of the newspaper. Instead, it’s something in between.

It provides our readers with instant access to breaking news, real-time market pricing and the best in international photo-journalism.

But it also retains the authority and reliability of our 60-year-old masthead, built on the biggest and best finance newsroom in Australia.

The big challenge for media organisations and other companies seeking to exploit the myriad opportunities thrown up by the extraordinary inter-connectivity of the internet, including our publisher
Fairfax Media
, is to extract value from our rapidly evolving digital world.

Social media and social networking companies such as Facebook, Twitter, LinkedIn, YouTube and Spotify are all still only a few years old, but they have already been given multibillion-dollar valuations by investors looking for the next big thing.

Just last month Facebook paid $US1 billion for Instagram, a free photo-sharing network with only a dozen or so staff.

Facebook’s $US104 billion initial public offering on May 18 created 850 instant millionaires among its employees and some former staff and made the firm’s 28-year-old jeans-clad founder one of the richest people in the world.

It remains to be seen how many of this new breed of internet companies will live up to the hype.

Facebook shares have dipped as much as 18 per cent since their listing on the technology-focused Nasdaq a little over a week ago, amid investor concerns that the company’s sales and revenue projections were overly bullish.

Fingers are being pointed at lead underwriter Morgan Stanley, which is being accused of selectively informing some of its clients of an analyst’s negative report before Facebook stock started trading.

The challenges that media companies face in extracting value from their products in the new digital age are especially difficult, particularly given the vast amount of free news content available online. Like music producers trying to protect their intellectual property rights, we know the world has changed but we still need to be able to charge something for premium content.

Berkshire Hathaway’s
Warren Buffett
, who has just announced plans to buy 63 newspapers to add to his media stable, talks of the need to “work out the blend of digital and print that will attract both the audience and the revenue we need".

The Australian Financial Review is confident our new quality app, by bridging this divide between digital and print, will do just that.

The intangible characteristics of the internet also pose a dilemma for governments trying to tax these new technology companies.

The issue came into sharp focus recently when it was revealed that US-based web search giant Google paid just $74,176 in tax in Australia in 2010-11 on about $1.1 billion estimated revenue, sparking a war of words between Communications Minister
Stephen Conroy
and his opposition counterpart,
Malcolm Turnbull
.

And it isn’t just the Australian Taxation Office that is having problems collecting tax.

Amazon is being investigated by tax authorities in the United Kingdom for reportedly generating £8 billion ($12.9 billion) in revenue over the last three years without paying tax, while Apple paid only £10 million in tax in the UK on revenues of about £6 billion in the year to September 2010.

Senator Conroy says the federal government is legislating to address the problem. Mr Turnbull reckons the government doesn’t understand that this is more than just a transfer-pricing issue.